Lamarcus R. Coleman

Mortgage REITS will decline in value with rising interest rates. I think now may be a good time to by Mortgage REITS and build longer term positions in Equity REITS.

Avoiding the fiscal cliff and a recession is the ideal situation. However, it's easier said than done. The economy has been running off of foreign stimulus, or leverage primarily from China. Essentially, our GDP has been somewhat synthetic and the removal of debt will in turn remove economic growth in the short run. The longer term picture is more optimistic. Taxes should increase. The U.S. has one of the lowest tax rates in the developed world and the amount the average American pays in taxes has been in decline for the last 30 years.

I would like to see us avoid the fiscal cliff and recession simultaneously, but the later of the two will be more difficult. Our economy is expanding, slowly, but growing at the least. Rapid tax increases and spending cuts would damage consumer confidence and spending, of which the later is 2/3 of GDP. I believe we will kick the can down the road and avoid the fiscal cliff, but could very well fall back into recession momentarily to begin to rebuild our fiscal policies.

The fiscal cliff is a definite possibility. I, however, feel that Congress will kick the can down the road at year end, which could boost the market. Investors should be prepared for the worse case scenario. The markets are very depressed and opportunities to buy quality at discounts are available. The economy has put up some okay numbers, showing some growth from that of the past. The housing market is in recovery and investors should now be looking to add real estate to their portfolios. I'm not saying go all in at this juncture, but buying calls on undervalued stocks and building into positions is a good strategy.

Interesting analysis. I agree. The market is oversold. A deal is more likely to get done now than in the past. Prior to the election, the GOP still had hopes of removing the President from office. Now that he's won re-election, their options are limited. The American people want bipartisanship. If we go off of the fiscal cliff, which I don't think will happen, the GOP will receive a lot of criticism.

Markets react to two fundamental elements, value and emotion. When the two diverge greatly, buying opportunities arise. I suggest buying calls on undervalued stocks. I like tech and real estate right now. Buying Nasdaq Futures may not be such a bad idea either.

Portfolio Risk Management: Have A Plan For The Worst Case Scenario (The Fiscal Cliff) [View article]

Absolutely not. I consider it as being a necessary risk management technique. Another key aspect of great investing is choosing your battles. Great investors don't have to be in the market all of the time, neither do they give in to greed. Taking some money off of the table, especially after a big run up, is a viable strategy to manage risk. As an investor, one's job is to look for the best investment decision, that is the one with the most optimal risk/reward scenario. To find these, one should utilize the current environment as a medium to anticipate the future with as much certainty as possible. Even if we're in a bull market, I still advocate having some money in cash in order to capitalize on a pullback. That's great investing.